Wednesday, May 10, 2017

allegedly false claims of official endorsement by Trump can be false advertising

Bobbleheads.com makes bobbleheads, including the Hillary Clinton
Striped Prison Pantsuit Bobblehead, an application for copyright registration
for which was filed Sept. 2, 2016 (and an application covering just the head
was filed in May 2016).

Bobbleheads argued that defendants made unauthorized copies
in two of their bobbleheads:

(I see the claim for the first, but the second? How is that anything more than the same idea?)

Several days after filing for the copyright registration,
Bobbleheads sent a C&D to defendants, and defendants allegedly took steps
to make it appear that they had temporarily discontinued the sale of the first
version. Bobbleheads also sent numerous
DMCA takedown notices to ISPs, allegedly causing defendants to shift their advertising
and sales to other platforms and outlets.

Bobbleheads also alleged that defendants falsely advertised that
their products were sponsored or otherwise affiliated with the Trump/Pence
Presidential campaign (using the Trump/Pence campaign logo on websites and
other advertisements; indicating that a copyright for their website was owned
by or affiliated with Trump; and stating in their advertisements that
Defendants’ bobbleheads were “The official bobble head doll of the 2016 Donald
Trump Presidential campaign”). Plus, defendants allegedly falsely advertised
that they were selling the second version, but actually shipped the first
version.

The court first considered whether Rule 9(b) applied to the
Lanham Act claim, and held that it did where the claim is grounded in fraud, as
here. Under that standard, the claims survived in part, with the exception of
conclusory allegations that defendants used Bobblehead’s pictures of its own
bobblehead to sell their competing bobbleheads.

Defendants also successfully argued that Bobbleheads lacked
standing under Lexmark because it
failed to allege any kind of reputational or economic injury as a result of the
conduct charged. Merely stating that
defendants’ false advertising “somehow caused Plaintiff to suffer damages” was
not specific enough—there were no more specific allegations of, “at the very
least, lost sales or damage to its reputation.” This wasn’t enough to plead
proximate causation. Bobbleheads argued
that “if one product is the ‘official’ product, every other product is
unofficial and therefore inferior. Consumers in the market are likely to choose
the official product over the unofficial one and thus Defendants, through their
false advertising campaign have diverted sales from the Plaintiff....” Such
allegations might be sufficient, but they weren’t in the complaint; Bobbleheads
could replead.

Defendants argued that Dastar
barred any relief. But Dastar is about false authorship claims,
not false endorsement. Bobbleheads didn’t
allege reverse passing off, or anything about the manufacturer of the
goods. Instead, Bobbleheads’ false
advertising claim was based on misrepresentations about “official” Trump endorsement.
This claim was “unrelated to the authorship or origin of Defendants’
bobbleheads,” and thus not covered by Dastar.

Defendants also argued that, “to the extent Plaintiff
complains of Defendants using an alleged false copyright notice, such a claim
must fail because the Copyright Act covers that kind of activity, but does not
allow for a private right of action.” But Bobbleheads wasn’t asserting a claim
for misuse of a copyright notice; instead the allegedly false copyright notice
was part of the overall false advertising claim based on misrepresentation of “official”
Trump campaign status.

Defendants further challenged the plausibility of
materiality here: It doesn’t matter if some customers who thought they were
ordering the second version received the first version because “the joke of the
bobblehead is the same regardless of the subtle variation in her hand position.” But literally false statements and images
were allegedly used to market the bobbleheads, and literal falsity is presumed
to have deceived consumers. Defendants
could attack materiality later.

The court also deferred ruling on defendants’ argument that Bobbleheads couldn’t
get statutory damages and attorney’s fees because Bobbleheads learned of the
alleged infringement before it applied for the registration. (Only the full doll registration was relevant
because the allegations of copying focused on everything but the head.) On the allegations of the complaint, the date
on which defendants began their infringement was unknown.

Same story, different bobblehead, here the Donald Trump Red
Hat Bobblehead, published in 2015, application for registration filed October
19, 2016.

Here, based on the dates, PPP agreed that it wasn’t entitled
to statutory damages/attorney’s fees under the Copyright Act, but the court
refused to dismiss its request for attorney’s fees under the Lanham Act. PPP adequately pled that this case was
exceptional in that defendants “were willfully blind and acted in reckless
disregard” of plaintiff’s rights, defendants falsely claimed an association with
the Trump organization; and that defendants engaged in a bait-and-switch
advertising campaign in order to hide their infringement of PPP’s bobblehead
and deceive consumers into purchasing a product they did not order.

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